There are some high-quality S&P/ASX 200 Index (ASX: XJO) shares that might be excellent ideas to consider. The below two…
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There are some high-quality S&P/ASX 200 Index (ASX: XJO) shares that might be excellent ideas to consider.
The below two businesses are two of the global leaders at what they do and they might continue to be good investments:
Xero Limited (ASX: XRO)
Xero is one of the world leaders in cloud accounting software. It aims to provide beautiful software that “connects people with the right numbers anytime, anywhere, on any device.”
The ASX 200 share said that for accountants and bookkeepers, Xero helps build a trusted relationship with small business clients through online collaboration.
It has a number of useful tools. One example is that business owners might be able to get paid faster. Xero says that businesses can improve cash flow by getting invoices paid faster on Xero with time-saving tools and reminders.
Xero has more than 2.7 million subscribers worldwide. FY21 saw subscribers rise by 20%, with Australian subscribers going up 22% to 1.1 million and UK subscribers growing 17% to 720,000. The strongest growth rate was with the rest of the world subscribers, which increased 40% to 175,000.
The above subscriber growth helped operating revenue increase by 18% to NZ$849 million. Xero’s gross profit margin increased 0.8 percentage points to 86% during FY21.
Management are very clear with the goals for the business:
Xero will continue to focus on growing its global small business platform and maintain a preference for reinvesting cash generated, subject to investment criteria and market conditions, to drive long-term shareholder value.
Macquarie Group Ltd (ASX: MQG)
The global investment bank has seen its share price go up 30% over the last year. Over the last six months, Macquarie shares have risen 8.5%.
Macquarie has proven that it is capable of producing profit despite the impacts of COVID-19. It has various business units – some are cyclical whereas others are ‘annuity-like’. Macquarie Asset Management is one of the biggest infrastructure managers in the world.
The annuity businesses provide a fairly consistent and defensive source of earnings for the ASX 200 investment bank.
However, there are also times when the cyclical parts of the business can power profit higher. That happened in FY21 when net profit increased by 10% on FY20 to $3 billion. The commodities and global markets (CGM) division generated profit growth of 50% with profit helped by the short-term client demand for the supply of gas and power in North America during extreme winter conditions.
Looking at Macquarie’s outlook, the CEO Ms Wikramanayake said:
Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets, strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions, an ongoing program to identify cost saving initiatives and efficiency, a strong and conservative balance sheet and a proven risk management framework and culture.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.